Amend, then Restate

[DP]

I have a small medical practice client that has a calendar year SH 401k plan with age 21/One YOS, semiannual entry dates. I have not restated them for EGTRRA yet. They added a new doctor 9/2/08 and they want him to be able to participate in the plan 1/1/09. Then they want to change the eligibility back to One YOS.

I was thinking that I could amend the plan effective 1/1/09 to allow entry after 3 months of service, and enter the 1st day of the following month. This would let one additional part-time person into the plan, plus possibly any new hires during 2009.

Then I would restate the plan for EGTRRA and change the eligibility back to 21/One YOS effective 1/1/10.

Does this sound reasonable?

[J Simmons]

Check out Treas Reg § 1.401(a)(4)-5 about the timing issue, which alone can create a discrimination problem--and your contemplated scenario smells a bit to me even though you'd have the 3 months in place for a year.

[Blinky the 3-eyed Fish]

Is the doctor an HCE or an NHCE?